SAN FRANCISCO: Google is pulling out all stops as it tries to close the gap with its larger rivals Microsoft and Amazon Web Services in the cloud marketplace in the country. The American technology giant announced that it plans to set up data centers in India by 2017 — a strategy that will help the company cater to a larger number of customers, especially those in the government or financial services industry since regulations in those sectors don’t permit data to be transmitted outside the country. The launch is part of a global announcement according to which Google plans to set up “new cloud regions” in eight more locations at a rate of “one new region every month”. It also comes at a time when Microsoft has already set up data centers at three locations in India and Amazon Web Services launched their local data centers in June this year. Both companies claim to have registered a sharp spike in growth rates after setting up data centers in the country. The centre will built in Mumbai.

Urs Hölzle, senior vice president for technical infrastructure at Google said that the decision to set up the cloud region in India is motivated by the “demand” from the country. “In India, the Internet scene has started to take off, there are startups, Reliance is putting up a huge network, I think its called Jio. Clearly with that there will be more Internet to everybody and so therefore more ecommerce and more opportunities be it business to business or business to customer,” he told ET. Hölzle added that with over a billion people living in India, its a “safe bet” to make. “There is a lot of demand and cloud can be very cost effective. I am pretty excited about the opportunity,” he said adding that the key is to scale ahead of demand.

Google’s move will only intensify the competition in the space which has already become very hot. The company, however didn’t disclose the total investment that it will make in setting up the new centers. “We have a lot of automation in our operations, so setting up a new region isn’t that expensive in terms of people. And we have the luxury of having capital,” said Hölzle.

Google claims that its Cloud arm already has one billion end users globally which include the likes of Snap Inc (formerly SnapChat), Niantic Labs (Pokemon Go), Telus International, and Evernote. In India, it has signed up names such as Wipro, Ashok Leyland, Smartshift by Mahindra & Mahindra, Dainik Bhaskar Group and startups such as INshorts.com.

Google made the announcement about the India Cloud Region at an event in San Francisco, called Horizon. Brian Stevens, vice president, Google Cloud said, “By expanding to new regions, we deliver higher performance to customers. In fact, our recent expansion in Oregon resulted in up to 80% improvement in latency for customers.” Singapore, Synden and Brazil are among the locations where new data centers will be live in 2017.

Diane Greene, the VMWare founder who was brought in by the American technology company in November 2015 as senior vice-president of enterprise business to head its cloud division said that cloud is the biggest IT transformation ever and Google’s pace is relentless. “Its a long term bet… We are closing the gap really fast,” she added.

In a recent interview to ET, Amazon Web Services India Head, Bikram Bedi said that after the launch of the India data centre, many companies which were earlier sitting on the fence have now moved to the cloud. “Our customers have been telling us that we want you to set up data centres in India for a couple of reasons- one is regulatory, and the second is latency. With the launch of these data centres we are able to address a much larger market. Existing customers who couldn't move some things because of regulatory issues have also moved now,” he had said.

Google also unveiled the G Suite which was previously called Google Apps for Work and encompasses enterprise apps such Gmail, Docs, Drive, Calendar, Hangouts, and more, which have been added with enhanced features with an aim to improve real-time collaboration between teams and employees.